Vestas Wind announces layoffs — with more to come unless US Congress extends tax support

In an ominous sign that the world economy is dragging on the wind industry, Denmark-based Vestas Wind announced today that it will lay off more than 2,300 employees as part of a reorganization to keep the company competitive.

The lay off of employees — 1,749 in Europe, 182 in the US and 404 in China and elsewhere — will help the company streamline and reduce its fixed costs by more than 150 million Euro, according to a statement.

Vestas, the world’s largest wind turbine manufacturer, also announced that it is preparing for a “potential slowdown in the US in case the present Production Tax Credit (PTC) is not extended.”

The PTC offers wind developers a tax credit based on the size of their project. It has been credited with keeping the industry’s sails billowing, even during the recent economic recession.

The PTC is due to expire at the end of 2012, and US wind advocates have urged Congress to renew the provision so that wind developers can continue to attract businesses and provide jobs. But deficit hawks in Congress have been reluctant to pass such measures, even though they are not direct spending bills, but tax abatements.

If the US fails to extend the PTC, Vestas says it will lay off an additional 1,600 employees at plants in the US, an announcement that caused the American Wind Energy Association to issue its own statement urging Congress to pay attention.

“Today’s Vestas announcement shows the danger to U.S. manufacturing jobs if Congress waits any longer to extend the Production Tax Credit (PTC). The layoffs have begun, and every week that goes by without a PTC extension puts these good American jobs at greater risk,” said AWEA CEO Denise Bode.

“Manufacturers like Vestas have invested billions of dollars a year in the U.S. economy, and wind energy has become one of the fastest-growing sources of new American manufacturing jobs. Studies show that with stable tax policy the wind industry can grow to nearly 100,000 American jobs in the next four years and support 500,000 American jobs by 2030. But we have to provide this industry with stable tax policy and a predictable business climate. A PTC extension needs to be first on the list of priorities to be included when Congress gets back to work again in a few weeks.”

The rest of Vestas’ multi-page announcement explained that the company’s restructuring of top management and divisions was aimed at reducing costs, achieving better economies of scale and readying the company for a renewed emphasis on offshore wind.

The statement noted that Vestas remains flush with business, starting 2012 with a backlog of orders for 7.4 Gigawatts of wind.